Janus Limited, a subsidiary entity, sold during the current period a non-current asset at a profit to its parent entity. The adjustment necessary on consolidation to reflect the tax effect of this transaction will result in an:

Question

Quizplus · Accepted Answer

The profit on the sale of the non-current asset is unrealized from a group perspective, so a deferred tax asset is recognized to account for the temporary difference created by the intercompany transaction.

Janus Limited, a Subsidiary Entity, Sold During the Current Period